Tuesday, September 16, 2008

I'm sure everyone is aware that on Oct 1st, HR 3221 will put an end to seller funded gifts for a buyers down payment on an FHA mortgage. The gifts are generally channeled through Nehemiah or Ameri-dream. There are strong arguments on both sides of this issue and I won't bore you by going into them here.

I'm not sure how I feel about this yet but I will say the proposal does add more control or safe guards if you will, for the program. HR 6694 will allow borrowers with credit scores of 680 or more to use seller-funded down payments. A credit score of 620 to 680, if using down payment assistance would pay higher insurance premiums.

Borrowers with scores lower than 620 will not be allowed to use these gift funds until sometime in 2009 if HUD wants to expand the program. The issue here is FHA's insurance requiring taxpayer subsidies. The article goes into more detail so you should go read it.

I do like the controls they are trying to apply. I would do one more thing if I had a voice. I would make these gifts direct to the borrowers at closing and eliminate channeling it through Nehemiah or other such organizations. These organizations charge a large fee which helps to inflate the loan amount. Put it in the guidelines and eliminate the unnecessary middle man.

Home buyers with good credit need access to mortgages with no down payments. If HR 6694 does not go through median income families do have another choice that many people don't know exist. That option is the 100% LTV Rural Housing Loans. It is a very good loan and easy to qualify for. Go to this website and review the benefits and guidelines. 100% housing loans.